Daily Times

All was hunky-dory in 2016. Stock market gave a mouth-watering 46 percent return. Growth figures were promising. Chinese investment was flowing in. But all came to a screeching halt. The political soap opera starting with the Panama papers and culminating in the Avenfield case which saw Nawaz Sharif incarcerated along with his daughter shrouded the country in a smoke of uncertainty and panic. Now after the General Elections 2018, the new government faces this difficult task: Steer the country away from an economic failure.

Imports have increased dramatically due to increasing oil prices. Exports not that much. The foreign exchange reserves are perilously low, covering less than two months of imports. Stock market has only started to breathe again and the recent rupee devaluation has only added to the concerns.

We have two options. Many would deny and say one. There are two directions that the heads of the government officials are turning to: East and West. On one side is a seasoned stalwart US with its International Monetary Fund “the lender of the last resort” at global level. On the other side is an economic behemoth China which also tends to be our best friend. What is happening was inevitable. The economic conundrum which we found ourselves in has commensurately powerful political and diplomatic undertones as well.

“Moving ahead Pakistan needs to maintain friendly relations with everyone. We have to align ourselves with China and US in such a way that although we cannot afford an all-out confrontation but the time has come that we voice our concerns and stop taking dictation. We have to take the first step”

US and China are engaged in a full blown trade war. Pakistan in this situation finds itself pressed between the two giants as the newly inducted government seeks to find a way to pull this country off an economic crisis. Employing a nuanced tack of political posturing, Mike Pompeo says that he worries about Pakistan using IMF’s loan to pay-off Chinese debt.

Imran Khan now faces few choices. Either go to IMF or turn to our friends from the East and Middle East: China and Saudi Arabia. China has for one helped with $2bn however according to different estimates the gap is $12bn. We can ask for more from China but it is already investing heavily in different projects. Saudi’s have said to help with $5bn but the money once again will only be used to buy oil. The case for going to IMF looks stronger as Imran Khan and his coterie plans create a special fund in what seems to be like a mass privatization move. The total number of companies to be managed through this special fund is estimated to be around 200.

Shan Saeed, Chief Economist at IQI Global, Malaysia and APEC region, says that “the main reason US is behaving in a rather careful way with Pakistan is because she is changing her pivot. Because of Belt and Road Initiative, we are becoming more relevant and important along the likes of the countries such as Malaysia, Indonesia, and Turkey etc. US will always remain jealous of China and of any country getting close to them reducing US influence in the region. In the meeting of IMF few months back that I personally attended, the first topic they talked about was BRI, highlighting its significance.

“Moving ahead Pakistan needs to maintain friendly relations with everyone. We have to align ourselves with China and US in such a way that although we cannot afford an all-out confrontation but the time has come that we voice our concerns and stop taking dictation. We have to take the first step”. “Doing so will involve increasing business confidence in the country in order to attract Foreign Direct Investment and become economically strong enough to take the above mentioned step”, he added. This underlines the gargantuan task that the new government is about to take on and the very gravity of its successful direction and completion.

The IMF team visits Pakistan on 27th September. The negotiations will be different this time as the loan might come with some subtle political manoeuvring. There is much more than a bailout that meets the eye in this case. The situation presages, to some extent, the difficulties Pakistan and the new government is going to confront. In dealing with US, either in diplomatic terms or economic issues, Pakistan might face a stern attitude one that relates one way or the other to China. This is all part of a greater game. We have to tread very carefully.

The writer is a freelance columnist. He can be reached at osamarizvi10@hotmail.com

Published in Daily Times, September 30^th 2018.